Arctic LNG-2 is Russia’s third major LNG project, which is on the Gydan Peninsula. Credit: Novatek.

The US government is working with allies over the sanctions imposed on Russia’s Arctic LNG 2 project, reported Reuters, citing a State Department representative.

Last week, the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury imposed sanctions on the Russian liquified natural gas (LNG) project.

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The Arctic LNG 2 project has been placed under the Specially Designated Nationals list.

Additionally, the OFAC granted a general licence that allows partners to wind down Arctic LNG 2 transactions by 31 January 2024.

Russian gas company Novatek owns a 60% stake in the project, which is expected to start production by the end of 2023.

Arctic LNG-2 is Russia’s third major LNG project located on the Gydan Peninsula.

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The project will feature three LNG trains, each with 6.6 million tonnes per annum capacity and aims to help the country surpass its present share of about 8% of the global LNG market to 20% by 2035.

According to a representative for the State Department, the sanctions are meant to prevent a surge in LNG prices.

“We do not have a strategic interest in reducing the global supply of energy, which would raise energy prices around the world and pad [Russian President Vladimir] Putin’s profits,” said the representative.

According to the Energy Information Administration, during the first half of this year, the US was the world’s biggest exporter of LNG.

“Through all of our sanctions designations we maintain close coordination with our partners on sanctions issues, and we will continue to do so,” the representative added.

French oil and gas major TotalEnergies and a Japanese consortium including Mitsui and Jogmec, each own a 10% stake in Arctic LNG-2.

TotalEnergies owns a total of 21.5% stake in the project through its stake in Novatek.

Earlier this week, Japan said it would work with the G7 nations to impose sanctions on Arctic LNG 2.

TotalEnergies has also said that it is assessing the impact of US sanctions on the project.